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When drafting a will, it’s easy for people to focus on designating who will receive major assets like homes, bank accounts, or valuable family heirlooms. However, they may overlook what happens to miscellaneous property that is not specifically mentioned in the will. This is when a residuary clause comes into play. If you are creating a will in New York, it is important to understand what a residuary clause is and how you can implement it. Read on and consult with a knowledgeable Putnam County wills attorney for more information and legal advice today.
What is a Residuary Clause in a Will?
A residuary clause is a provision in a will that determines who receives any remaining assets after all specific gifts, debts, taxes, and administrative expenses have been paid. It is put in place to protect any property that was not specifically left to a beneficiary.
For example, it’s common for a will to leave a house to a spouse, a vehicle to a child, or jewelry to a sibling or friend. However, the person may also own additional bank accounts, investment accounts, other personal property, or assets acquired after the will was signed. The residuary clause dictates who receives those remaining assets that do not have specific instructions associated with them. Common examples include:
- Remaining checking account balances
- Stocks and brokerage accounts
- Furniture
- Clothes
- Business interests
- Rental income
- Lawsuit settlements received after death
- Newly discovered property
Few people actually list every single individual asset they own in a will, so the residuary estate often represents the largest portion of the estate. The residuary estate is made up of all probate assets after specific gifts are distributed, debts are paid, estate taxes are resolved, and administration costs are handled.
What is the Importance of a Residuary Clause?
A residuary clause is vitally important during the creation of a will. Many people assume that once they specify who to leave major assets to, the document is complete. However, people often underestimate the amount of property they actually own, and estates often contain assets that were forgotten, acquired later, or not individually addressed.
A person’s financial situation can change constantly throughout their life. They may open a new bank account, purchase investments, receive inheritance money, sell old property, or acquire new valuable assets after signing their will. The residuary clause ensures that these “leftover” assets still pass according to the testator’s wishes. Without including the provision, property not specifically mentioned in the will may pass according to New York intestacy laws instead of going to beneficiaries.
What Are Intestacy Laws?
Intestacy laws dictate how property and assets are distributed if an individual passes away without a legally valid will (or without specifying what should happen to certain assets). Under New York intestacy laws, property is distributed according to a legal hierarchy of surviving relatives, beginning with spouses and children, which may not align with the individual’s true desires for their estate.
The residuary clause is important to ensure that the testator’s final wishes are honored. For more information and legal advice, reach out to a skilled attorney today.
